Good day, and thank you for standing by. Welcome to the Kyndryl Third Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lori Chaitman, Head of Investor Relations. Ma'am, please go ahead. Good morning, everyone, and welcome to Kyndryl's earnings call for the third quarter ended December 31st, 2024. Before we begin, I'd like to remind you that our remarks today will include forward-looking statements. These statements are subject to risk factors that may cause our actual results to differ materially from those expressed or implied. These forward-looking statements speak only to our expectations as of today. For more details on some of these risks, please see the risk factors section of our annual report on Form 10-K for the year ended March 31st, 2024. In today's remarks, we'll also refer to certain non-GAAP financial metrics. Corresponding GAAP metrics and a reconciliation of non-GAAP metrics to GAAP metrics for historical periods are provided in the presentation materials for today's event, which are available on our website at investors.kyndryl.com. With me here are Kyndryl's Chairman and Chief Executive Officer, Martin Schroeter, and Kyndryl's Chief Financial Officer, David Wyshner. Following our prepared remarks, we'll hold a Q&A session. I'd now like to turn the call over to Martin. Martin? Thank you, Lori, and thanks to each of you for joining us. On today's call, I'll discuss our recent progress and execution, the momentum that our capabilities are generating for us in the marketplace, and the growth strategy we outlined at our Investor Day in November. David will then share more detail on our recent financial results and our increased fiscal 2025 earnings outlook. We delivered another strong quarter for signings, margins, and earnings growth. Signings grew year-over-year for the fifth consecutive quarter and are up 31% to $16.3 billion over the last 12 months. Adjusted pre-tax margins increased substantially compared to last year, and we generated more than $170 million of adjusted free cash flow in the quarter. Once again, our performance was led by double-digit revenue growth in Kyndryl Consult and demand for modernization, cloud, security, and AI services. Hyperscaler-related revenue surpassed $300 million in the quarter, tracking ahead of our nearly $1 billion full-year target. Our 3As initiatives (alliances, accounts, and advanced delivery) continue to generate incremental signings, revenue, and earnings. As David will discuss, the projected pre-tax margins on our signings continue to be in the high single digits, which is a leading indicator of our future earnings and cash flow trajectory. In short, it was another great quarter of strong execution by our team, driving substantial progress toward our near-term and longer-term goals. In addition, we began to buy back stock in the quarter under the share repurchase authorization we announced in November. As an independent company, we've leveraged our global scale and our expertise in mission-critical work and our global scale to be a vital and trusted partner for our customers' current and future technology needs. We've done this by investing in several key areas: capturing data about how complex IT systems and networks operate and using that data to drive learnings. Concentrating this world-class intellectual property in Kyndryl Bridge, which is our innovation-rich, AI-enabled operating platform, to drive insights, automation, optimization, and efficiency. And building alliances with leading technology providers that allow us to offer hybrid, multi-vendor solutions to our customers. As a result, we're able to seize opportunities that emerge from a variety of reasons, whether they relate to modernization, complex cloud migration, cybersecurity incidents, regulatory changes, disruption to peer companies, or the integration of new technologies like GenAI. Existing and new customers continue to partner with Kyndryl for our capabilities and for innovation, efficiency through automation, and actionable insights from Kyndryl Bridge. For example, through our Skytap acquisition and our alliance with Microsoft Azure, we're seeing additional opportunities to deliver cloud migration services. We're able to bring our mainframe modernization and application services skills and hyperscaler alliances together to migrate, manage, optimize, and secure our customers' IT environments across multiple cloud platforms, including AWS and Google, in addition to Azure. Separately, we continue to collaborate with our enterprise software partners, including widely used platforms like Dynatrace, Oracle, Palo Alto Networks, Rubrik, and SAP, to support our customers' IT needs. As a testament to the Kyndryl way, we continue to achieve top-tier customer satisfaction scores. We've had annual customer retention in the upper 90s over the last three years, and we've added more than 300 new customers over that period. In fact, as many of you heard me say, we're uniquely positioned to address secular IT trends like cloud migration, increasingly hybrid IT environments, technology skill shortages, cybersecurity risks, and the adoption of artificial intelligence. And these trends are creating new opportunities for us. Over the last 12 months, Kyndryl Consult revenues are up 18%, and Kyndryl Consult signings are up 45%. Consult is now a $3 billion revenue stream for us, with above-average margins and a runway for future growth. Many of you ask what role we play for our customers in AI. As the world's largest managed infrastructure services provider with 30-plus years managing complex, mission-critical systems, we operate at the center of our customers' AI investments with a distinctive perspective. Customers know that their AI is only going to be as good as their data, so we use our data expertise to support them in establishing a reliable digital foundation to enable AI at scale and capitalize on its benefits. We're collaborating with our customers and our alliance partners to address barriers to AI adoption, such as data privacy, security, governance, and skills. And we're facilitating successful deployment of AI at scale, including the development of secure and responsible AI governance models. We're also working with customers in multiple sectors on projects across the AI spectrum, including traditional AI, generative AI, and agentic AI, both in the cloud and on legacy platforms. As an example, in November, we announced the launch of a dedicated AI private cloud in Japan, leveraging the Dell AI Factory with NVIDIA to provide a controlled, secure, and sovereign environment where enterprises can develop, test, and plan the implementation of AI-powered applications and solutions. And we're moving quickly to work with customers in other countries that want their own country-specific AI environments. Across virtually all industries, the modernization of IT systems is not a discretionary item but front and center for CEOs and their boards in an increasingly digital world. In financial services, we're working with banks, insurance companies, and others to modernize IT estates, reduce operational risk, manage technical debt, enable the use of AI, and ensure compliance with regulatory changes such as DORA. In Latin America, for example, we recently announced a five-year, $500 million-plus contract with a leading bank where we're partnering with Microsoft to modernize the bank's IT systems and help consumers gain greater access to digital banking services. In Japan, we've not only extended our mission-critical services contract with Taiju Life, a major life insurer until December 2029. We'll now also support the operation of its next-generation systems and promote IT modernization to strengthen the company's operations. In retail and travel, we're seeing increased demand to enable the use of AI and enhance customers' digital experiences, security, and data privacy. We're working with one of the largest vehicle rental companies in the world to modernize its digital platforms, enhance its booking and fleet management systems, and ensure a secure and resilient online payment experience for their consumers. In tech, media, and telecom, we're working with organizations to modernize their IT estates, enhance security and resiliency, and deploy new applications and services to consumers. In Spain, for example, a leading telecommunications firm announced that it signed a six-year agreement with Kyndryl to modernize its core IT environment. This will enable mass R&D employees, collaborators, and customers to develop a new generation of applications and services on a flexible, secure platform, and in the UK, we're partnering with WPP to create a modern digital workplace that enhances creativity and connectivity across WPP's global network using hybrid cloud and AI technologies. We're also expanding our scope with industrial companies, particularly manufacturing, logistics, and energy firms. For example, we recently expanded our scope of work and significantly increased our annual revenue with a large aerospace and defense company. We've been managing their mission-critical operations for more than a decade. Our delivery capabilities, service excellence, and strong partnerships were instrumental in allowing us to extend our existing relationship in several areas and displace an incumbent provider in several others. Under our now expanded contract, our Kyndryl Consult team will develop and implement a new architecture designed to modernize resiliency and backup solutions and provide new cloud, data, security, network, and other services. With the integration of Kyndryl Bridge, we're enabling automation and analytics and driving efficiencies in our customers' operations. An important benefit of our leadership and scale is our ability to bring new Kyndryl perspectives and insights to our customers in the broader IT market. Insights from Kyndryl Bridge are helping customers prioritize their IT investments every day. In addition, we recently published our inaugural Kyndryl Readiness Report, which explored how businesses' IT and talent can help or hinder their progress and how ready businesses are for future risks and opportunities. In December, we published a Japan-specific report with data and insights relevant to that market, and just this past quarter, we launched the Kyndryl Institute, which provides a platform for Kyndryl's thought leaders and external experts from industry, academia, and startups to offer new perspectives and research on major IT challenges. We're looking to amplify independent voices and convene diverse perspectives to drive an impactful dialogue on topics at the intersection of technology and business. In December, we published our first articles on the theme of readiness as it relates to digital trade and AI. These are examples of how we compare Kyndryl perspectives with what we're seeing in the market to offer valuable insights. As we've highlighted before, our evolving business mix, where we're focusing on higher-value services for our customers, is driving increased profitability and fueling future top-line growth. We have confidence in our ability to continue to set ambitious goals and achieve them. With that in mind, in November, we introduced our medium-term outlook with a triple, double, single mnemonic. We're projecting to triple our adjusted free cash flow in fiscal 2028 compared to fiscal 2025 to roughly $1 billion. We're projected to more than double our adjusted pre-tax income to at least $1.2 billion over that same time period. And we project that we only need revenue to reach mid-single-digit annual growth in fiscal 2028 and beyond to deliver those goals. With strong conversion of our earnings to free cash flow, we'll balance our approach to capital allocation by investing in organic growth opportunities and occasional tuck-in acquisitions and, at the same time, return capital to shareholders through our share repurchase program. Because of our recognized industry leadership, expertise, scale, and financial strength, customers trust us to manage their most mission-critical systems. And in the last three years, we've become an integral part of the broad IT ecosystem that is relevant to our customers. The mission-critical infrastructure services we provide are our foundation for sustained profitable growth. Our focus on IT infrastructure, our ability to leverage technologies from multiple sources, and the operational insights from Kyndryl Bridge are what give us the credibility and access to move into more consulting engagements and expand our presence through customers' tech stacks. With our higher-value service offerings, automation, and AI, we're significantly expanding our margin profile with the goal of reaching high single-digit adjusted pre-tax margins and converting those earnings into cash flow, and this framework gives us the flexibility to return capital to shareholders through our buyback program while maintaining the investment-grade ratings that are important to our customers. We're enthusiastic about returning to revenue growth this quarter and closing out our fiscal year strong. At the same time, our focus is on taking the work we've done and the progress we've delivered to the next level, account by account, team by team, across delivery, Kyndryl Consult, and our practices to deliver sustainable, profitable growth over time. We will continue to execute, delivering innovative services for our customers, growing our share of wallet with existing accounts, and, of course, winning new business as well. Now, with that, David, we'll take you through our results and our outlook. Thanks, Martin. And hello, everyone. Today, I'd like to discuss our third-quarter results, our continued progress on our 3As initiatives, the solid margins at which we're signing customer contracts, and our outlook for fiscal year 2025. The key message is that we delivered dramatically higher record margins and earnings this quarter, and that's a result of strong execution on our powerful strategy. In the third quarter, revenue totaled $3.7 billion, only a 3% decline in constant currency. We've now lapped our most aggressive actions to step away from negative, no, and low-margin revenue streams, and we're adding new customers and expanding the scope of services we provide to existing customers. As a result, our constant currency revenue growth was sequentially four points stronger than the year-over-year decline we reported last quarter, consistent with our plans to inflect back toward growth in the second half of our fiscal year. Our reported revenues were affected by currency movements, creating a two-point gap between our reported revenue change and our constant currency revenue change, unlike the second quarter when both numbers were the same. As Martin highlighted, our $4.1 billion of signings made Q3 our fifth consecutive quarter of signings growth and brings our trailing 12 months' signings growth to 31%. Our strength is broad-based, both across our practices and among our segments. We also continue to gain momentum in higher-margin advisory services. In the quarter, Kyndryl Consult revenues grew 26% year-over-year, which underscores how we're growing our share in this higher value-add space. Kyndryl Consult signings grew even faster, up 35%. And importantly, we're also delivering growth in managed services. Our managed services signings have increased 27% in the last 12 months. Our third-quarter Adjusted EBITDA was $704 million, and our Adjusted EBITDA margin was a record 18.8%, up 320 basis points year-over-year. Adjusted pre-tax income was up 154% to a record $160 million, and our adjusted pre-tax margin increased 270 basis points year-over-year. Our financial progress continues to reflect our strategic execution, leveraging technology alliances, stepping away from empty calorie revenues, fixing focus accounts, growing the consult portion of our business, driving efficiency throughout our operations, and positioning Kyndryl to meet our customers' future IT needs. Included in our $160 million of adjusted pre-tax income was $17 million in workforce rebalancing charges and the contractually committed $50 million year-over-year increase in IBM software costs that we've discussed on prior calls. As a result, our underlying operational momentum is even stronger than the $90-plus million increase in adjusted pre-tax income we reported. Through our alliances, we generated $300 million in hyperscaler-related revenue in the third quarter. Our $800 million year-to-date total puts us on track to exceed $1 billion of hyperscaler-related revenue this year, more than double our fiscal 2024 total. Through our advanced delivery initiative powered by Kyndryl Bridge, we continue to drive automation throughout our delivery operations, incorporate more technology into our offerings, reduce our costs, and increase our already strong service levels. It's a win-win for Kyndryl and our customers. To date, we've been able to free up more than 12,300 delivery professionals to address new revenue opportunities and backfill attrition. This is worth a cumulative $725 million a year to us. Our accounts initiative continues to remediate elements of contracts we inherited with substandard margins. In the third quarter, we increased the cumulative annualized profit from our focus accounts by $50 million- $825 million. Clearly, the 3 A's remain an important source of margin expansion and value creation for us. Consistent with what I've shared in prior quarters, I'm particularly enthusiastic about how we continue to position Kyndryl for future revenue, margin, and profit growth. As we grew signings this past quarter, we continued to command attractive margins on our signings. Throughout fiscal 2024 and now through the first three quarters of fiscal 2025, we've signed contracts with projected gross margins in the mid-20s% and projected pre-tax margins in the very high single digits%. Therefore, as our business mix increasingly shifts toward more post-bid contracts, you'll see significant margin expansion in our reported results. We've again included a gross profit book-to-bill chart that accentuates how we've been creating and capturing value in our business. With an average projected gross margin of 25% on our $16.3 billion of signings over the last 12 months, we've added over $4 billion of projected gross profit to our backlog. Over that same period of time, we've reported gross profit of $3 billion. This means we've been adding significantly more gross profit to our backlog than our contracted book of business has been producing in our P&L. Having a gross profit book-to-bill ratio above one at 1.4 over the last 12 months is a key measure of how we're growing what matters most: the expected future profit from committed contracts. And with our gross profit book-to-bill ratio having been consistently above one, that means we've been consistently growing our gross profit backlog over the last three years. Turning to our cash flow and balance sheet, our adjusted free cash flow was $171 million in the quarter. Our gross capital expenditures were $109 million, and we received $16 million of proceeds from asset dispositions. We've provided a bridge from our adjusted pre-tax income to our free cash flow, as well as a bridge from our adjusted EBITDA to our free cash flow in the appendix. Under the brand new share repurchase authorization we announced in late November, we bought back 859,000 shares of our common stock in the quarter at a cost of $30 million. Our financial position remains strong. Our cash balance at December 31 was $1.5 billion. Our cash, combined with available debt capacity under committed borrowing facilities, gave us more than $4.5 billion of liquidity at quarter end. Our debt maturities are well laddered from late 2026 to 2041. We had no borrowings outstanding under a revolving credit facility, and our net debt at quarter end was $1.7 billion. Our target has been to keep net leverage below one times adjusted EBITDA, and we ended the quarter well within our target range at 0.7 times. We are rated investment-grade by Moody's, Fitch, and S&P. On capital allocation, our top priorities are to maintain strong liquidity, remain investment-grade, reinvest in our business, and regularly return capital to shareholders. As we said before, our core financial goals are to continue to inflect our revenues back to growth as the year progresses, expand our margins, grow our earnings, and generate free cash flow. We're raising our earnings outlook for our fiscal 2025 adjusted EBITDA margin and adjusted pre-tax income, primarily to reflect the execution against our plan we delivered in Q3. Our outlook for full-year adjusted EBITDA margin is now at least 16.7%, and our outlook for adjusted pre-tax income is at least $475 million. Looking at the fourth quarter in particular, our full-year guidance implies that our adjusted pre-tax income will be a multiple of the $30 million we reported in last year's fourth quarter. On revenue, we expect to deliver year-over-year constant currency revenue growth of approximately 2% in the fourth quarter. Reported revenue will depend on exchange rates during the quarter, including the significant strengthening of the U.S. dollar relative to most major currencies over the last three months. On the topic of cash flow, for the year as a whole, we're now expecting roughly $600 million of net capital expenditures and depreciation expense of $650 million, as well as $150 million in cash taxes. This translates to roughly $350 million in adjusted free cash flow in fiscal 2025, a $50 million increase from our previous outlook. As we have in the past, we plan to provide our outlook for next year's revenue, earnings, and cash flow when we report results in May. And as I hope you heard during our Investor Day event in November, over the medium term, we remain committed to delivering significant margin expansion and growing free cash flow. We have a solid game plan to drive our strategic progress, and this game plan starts with the steps we've already taken to expand our technology alliances, manage our costs, and earn a return on all of our revenues. In closing, I want to highlight a couple of the reasons we're achieving the earnings growth we've reported this year and our position to deliver going forward. First, we're the world leader in providing mission-critical technology infrastructure services and related consulting services to enterprise customers around the globe. This is because of the strong and expanding capabilities embedded in Kyndryl Bridge and our people, and second, we've been executing on a powerful strategy to transform our business as an independent company poised to provide solutions that incorporate a broad range of technologies to drive business outcomes, so let me end by thanking the tens of thousands of Kyndryls around the world who are powering our progress. With that, Martin and I would be pleased to take your questions. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. We ask that you please limit yourself to one question and one follow-up. One moment while we compile our Q&A roster. Martin, are you ready for our first question? Yes, Operator. Thank you very much. All right. Our first question is going to come from the line of Tien-Tsin Huang with JPMorgan. Your line is open. Please go ahead. Hey, thanks a lot. Really great signings here. So I just wanted to ask about pipeline from here. I know we've crossed the calendar year. Any change in tone on the ground from what you've seen on the pipeline standpoint and confidence in converting the backlog in a timely way, that kind of thing? Sure. Thanks, Tien-Tsin. Look, we see a very strong pipeline in fourth quarter, our fiscal fourth quarter. And it continues to be driven by the capabilities that we've built. It continues to be led by Consult. You saw that we had another great Consult signings and revenue quarter. When we entered the year, as we talked about and gave guidance initially, we said the two vectors of growth for us that will get us back to growth in the fourth fiscal quarter are Kyndryl Consult and our alliance activity. And as you've seen, we're going to be well ahead of the rate of growth that we achieved last year in both signings and revenue and consult. And we're actually on pace to beat the alliance activity as well. So demand remains strong, driven by our capabilities. And the pace of complexity is a real tailwind for us. As you saw from our readiness survey, while 90% of the C-suite thinks their IT infrastructure is best in class, fewer than 40% feel like they're ready to take advantage of the opportunities that are present or to manage those risks. And so the things we do, sometimes super exciting, like helping them with their AI projects, but sometimes a little more boring, like configuration management and asset management, all of it is to allow them to position themselves for the future. So we see a great demand profile continuing. Great. No, thanks for that. Just my follow-up is you delivered on the profits, and the outlook here looks strong. I know FX is obviously a drag, and there's a lot of debate around the outlook on the dollar. Just curious here on the hedging and the efficiency and contract profitability given potential volatility in the dollar. I know there's good history here for you, but is it worth going through that, maybe, David, just to make sure that we're good on hedge efficiency? Yeah. We feel good about our hedge efficiency this year and how that's working out. Obviously, revenues move around based on where exchange rates are. But when we look at our expectations for the impacts that currency would have on us, year-over-year, there's a significant impact. At the beginning of the year, we expected it to be a $75 million headwind for us. And then with our hedging, by the time we got to August, it was a 70, even with the moves that we'd had, it was a $70 million headwind. Now it's an $80 million headwind. And so what we've seen is that even though there have been large movements in exchange rates because of our hedging program, the impact on the bottom line that we've seen has been very limited compared to what we expected at the beginning of the year. So year-over-year, yes, it's a headwind, but our hedging programs are keeping that very consistent with what we expected at the beginning of the year, with the movements being initially a favorable five and then an unfavorable 10. So net, only $5 million away from what we were anticipating at the beginning of the year. All right. No, that's very clear. Thank you so much, as always. Thank you. Thank you. Thank you. you. Operator, next question, please. One moment. Our next question is going to come from the line of Tyler DuPont with Bank of America. Your line is open. Please go ahead. Hey, good. Good Good morning, Martin. David, thanks for taking the questions. It was nice to see another quarter of bookings growth. On a quarterly book-to-bill above one is always good to see. So I just want to ask where you can pinpoint this growth is coming from, whether it's across specific practices or industries. And if you could sort of provide an update on the ramp of the recent large deals that you signed. It sounds like there were around 20 deals fiscal year to date over $100 million. How is that ramp compared to expectations and any callouts there? Sure. As I mentioned during the prepared remarks, we're seeing strength that's really very broad-based, and it's running across our geographic segments in terms of the signings growth that we're seeing. It's running across our practices as well, with five of our six practices seeing signings growth north of 20%. So very broad-based from that perspective. And really, throughout the industries that we serve, financial services, obviously, being a key part of that, but strength there in retail and travel, good industrial uptake, public sector, and healthcare activity continues to be robust as well. So we feel that for us, call it the macro elements, the macro picture has felt fairly consistent from sector to sector. Among practices, I think we expect to continue to see strong growth in security and resiliency, cloud, and apps data and AI. And certainly, apps data and AI has been a particular growth area for us. So that's an important part of what we're driving. And then on the large deals, you're right, the more than $100 million signings that we've had this year, we've had 20 year- to- date compared to 10 in the first nine months last year. So real ramp up in that activity. And certainly, that's an important contributor to the signings growth that we've had. But we've also had a lot of signings growth on the consult side. And those typically tend to be smaller or less than $100 million transactions there. So again, when we look both at consult and at large managed services signings, we're seeing strength on both sides. And they represent, sorry, David, just to add, they also represent, Tyler, both renewals and growth within our existing customer base and new customers as well. That's right. One of the $100 million signings this quarter was actually a new logo for us. Great. That's very helpful, David and Martin. Appreciate that. And just speaking of macro, I wanted to also ask about tariffs and recent client conversations you're having with respect to potential tariff implications. As yesterday kind of proved, you can definitely get whiplash keeping up with back and forth. But many of your clients are impacted by potential tariffs. And given where we are in the calendar year with enterprise IT budgets being finalized right around this time, I'd be curious if maybe you could speak to any client dynamics you're seeing there, potentially tariff implications leading to sort of elongated timelines, just anything there worth calling out? Sure. Let me make a few comments. First, from what we've seen, everything we've seen, there's no direct impact to Kyndryl. And bear in mind that what we do is not discretionary, as we said before. From a customer perspective, I think it's also important to note out, and you said this well, it changed dramatically in 24 hours. And I think from our customer's perspective, what they're dealing with is that volatility. They're trying to figure out where this is going, where it might land, and then how they might respond. But it's really no different from any other business challenge that our customers face, whether it's a challenge in reaching new customers and how to provide better employee experiences. Yes, those are maybe less volatile. But the regulatory environment changes all the time. And in each of those cases, each of those cases has a technology component to help. It's not always the entire answer, but it's always part of the answer. So for us, it's a tailwind to demand as, again, our customer base is trying to navigate increased uncertainty. In any instance, all of those things are good tailwinds to our business. And I think that's part of why we've seen consistent double-digit signings growth in Kyndryl Consult, because we help them with the basics so they can be prepared for any environment. Great. That's very helpful, Martin. Appreciate the insights. Thanks, Tyler. Thanks, Tyler. Operator, next question, please. One moment. Our next question comes from the line of Divya Goyal with Scotiabank. Your line is open. Please go ahead. Good morning, everyone. So Martin, on this macro theme, I wanted to actually try to get Kyndryl's take or Kyndryl's positioning on AI front with DeepSeek-like models potentially coming to the forefront. How does Kyndryl and Kyndryl's business get impacted one way or the other with the proliferation of potentially deeper models coming to the market in the near future, if I may say? Sure. Thanks, Divya. And thanks for joining the call. When we talk to our customers about AI and their plans, we do a lot of work to get their data architecture ready. We do a lot of work to help them design and test different opportunities. Then when they're ready to go, and I'm going to come back to that ready-to-go point in a second, when they're ready to go, we help them put it into production, doing all the things that have to be done if you're going to embed AI into a process. You have to understand where your assets are. You have to understand how to transform that application landscape. You have to understand the configuration management. Going from a POC to a run environment is very complex. That's why customers rely on us, because we know most about their systems. And our run and transform approach allows them to scale these things. Now, the DeepSeek innovation, if you will, it's part of what customers are struggling with. But on the list of what their challenges are, really, they need AI skills. Probably number one is how do our customers get the AI skills they need to even try these POCs? They need to understand the data privacy and the security constraints that sit around what they might be trying. And there's a regulatory element to that as well. They need to figure out how to integrate this stuff. And then there is, then ultimately, there's a business case. And to the extent that DeepSeek or somebody else has figured out a way to shorten the training time, sure, that would be a tailwind to a new business case. But there's so many more things happening around the AI space that our customers need to address that it's just, again, it's just one of the elements. All of this points to, as I said earlier, all this points to an increased rate of innovation, which is an increased rate of complexity, which means customers need to deal with the vulnerabilities of their infrastructure and invest with us, as you see in our signings growth, invest with us to be ready for the future. So we'll see what happens with DeepSeek. We'll see what the world learns about it. Everyone, I think, is trying. Our customer base is trying. We've helped their customer base with embedding machine learning into their processes, embedding GenAI into their process, embedding agentic AI into their processes. So good tailwind for us. But again, we sit at the base of what has to happen in order for them to take advantage of the opportunities they say. That's helpful. Maybe in the same vein, I'll just ask a follow-up. So across your U.S. business, and we've not talked about this in the past, so I'm trying to get your perspective here. Could the DOGE or the efficiencies that are getting created with DOGE and the federal U.S. government have any impact whatsoever, again, positively or negatively, on Kyndryl? And that's all for me. Yeah. Okay. Look, I think any attempt to make a business or government, state, federal, anywhere more efficient is an opportunity for us because at the heart of what we do, yes, we get our customers ready for the future, and we help them prepare for the changing environment. But we also deliver a lot of productivity. Enterprise IT is the foundation of productivity. So our ability to help them unleash resources, our ability to help them embed new technologies, which make them more productive, our ability, quite frankly, to help them find unused resources. And Kyndryl Bridge, as an example, does this for our customer base. We can find all of the public cloud instances that somebody spun up that are no longer being used. We can find unused software licenses in their environment. So any focus on productivity is a good tailwind for us. Now, the DOGE, as part of the U.S. federal government, we don't have a big U.S. federal business currently. So I don't see a specific element there. But again, any focus on productivity is something we can help with. So I think it's a tailwind for us, Divya. That's great. Thank you. Thanks, Divya. Operator, next question, please. One moment. Our next question is going to come from the line of Ian Zaffino with Oppenheimer. Your line is open. Please go ahead. Hi. Great. Thank you very much. Not to really beat a dead horse here on the AI side, but is there anything to your benefit in how you run your business that something like a DeepSeek could bring, if it's Bridge or anywhere else, and kind of how are you thinking about that? Thanks. A couple of things. Obviously, we're pretty substantial investors in and users of our AI, our machine learning. It does sit at the heart of Bridge. And critically, we are giving our customers insights that are coming out of Bridge so they can understand how to optimize. Within DeepSeek, at least on our early work and looking at it, there is some innovation here around how to split up, if you will, a problem and distribute that problem to be solved across an estate. So you're using resources that already exist and are underutilized. So I do think there are some innovations. And that's just one specifically. But there are some innovations in what DeepSeek has accomplished that are worth investigating and understanding and figuring out how can we use resources more effectively. But again, Kyndryl Bridge and the machine learning in Kyndryl Bridge is what today drives the way we deliver. It's today what drives our ability to automate. It's today what drives our ability to give insights to our customers and create kind of this self-healing architecture that we've talked about. So, yeah, I think there might be something in here we'll have to. We're have to. We're spending some time to understand it. Okay. Great, and then if I was to turn to the consult business a little bit, how are you thinking about that growth as far as the pace it's been growing at, the ability to continue that? And then when you look at the growth, where is that per se coming from? Is that share gains? Is that winning new business? Is it expanding with additional accounts or existing accounts? Maybe kind of give us an understanding of the sources of growth there. Thanks. Sure, and certainly, the growth is something we're really excited about. Consult has grown from being 10% of our business at spin, probably 14% a couple of years ago, and 21% of revenues this past quarter. It was the first time we crossed over the 20% threshold. It's running around 25% of our signings. So we've got what we think is a clear path to moving up to Consult being about a quarter of our revenue in the not-too-distant future, and then ultimately, maybe even a little bit more than that. So it's an increasingly important part of our revenue and our earnings and how we go to market and how we meet customer needs. And I think what we're seeing is that the growth there is coming from a number of different areas. By definition, that kind of growth is a share gain. And I do think there's work that other firms were providing before we were an independent company with the alliances we currently have that we're now able to provide. And that gives us an opportunity to take business that others were doing, as well as to do some things that our customers for whom we were providing managed services sort of had to do on their own and do internally. So part of what we're doing is actually growing the pie in terms of work that we can provide that folks needed to do internally. So I really see the growth as being a combination of share from others and some work that was previously insourced moving to us. And that's that set of opportunities associated with that. Our ability to provide multi-vendor solutions and to be objective in finding the best solutions for our customers is something that's really distinguishing us and creating opportunities that are clearly so unique to us in the marketplace so that we're able to achieve growth levels that are significantly above where other folks have been. Great. All right. Perfect. Thanks for all the color. Thanks. Thanks, Ian. Operator, I think we have one more question in the queue, please. One moment. And our last question is going to come from the line of Jamie Friedman with Susquehanna. Your line is open. Please go ahead. Hi. Thank you. And good results here. So Martin, I wanted to ask you also about consult. I thought that was an excellent prior question. But to step back, how would you describe the mind share of consult? What is consult known for? If you ask the industry what, I'll just say, Infosys is known for extreme offshoring. Accenture is known for best practices. I'm just giving you the one-liners. What's the mind share that Kyndryl Consult is, or what is it that you anticipate it will be for consult? Yeah. Thanks, Jamie. Look, it's a great question. I think it's two things. It's mission-critical, and it's run and transform. And the ability to run and transform is not something that our customers have organically, and they need help. But at the same time, because we're doing mission-critical, we obviously need to keep those systems running while transforming them for the future. And as I noted earlier, the ability and the insights that we get from Kyndryl Bridge allow our Kyndryl Consult team to go in and make very fast recommendations that can be implemented quickly to, again, prepare our customer systems for the opportunities or, quite frankly, the changes they need to keep up with the changing regulatory environment, so mission-critical, and our run and transform approach will continue to drive our Kyndryl Consult growth. Thank you. And then, David, in terms of where we are in the evolution of the IBM relationship, could you just remind us about that transition to the P times Q, when that happened, if it already has happened or if it will happen, and how to think about what that's about and how to quantify it? Thank you. Sure. We continue to be a fairly large customer, a large customer of IBM's, one of their largest in the world, particularly of software and mainframe-related software, given the size of the mainframe estate we manage for our customers. In terms of the IBM relationship, we've exited all the transition services agreements. And I'd say our relationship is primarily a vendor-customer relationship at this point in time. And with respect to software, there are two things going on. The first is that we were entitled to a declining rebate over time. And that's what's been giving rise to the $200 million annual increase in cost. So our rebate went down in fiscal 2023 and fiscal 2024, and sorry, calendar 2023, calendar 2024, and again in calendar 2025. And so this is what's created a $200 million headwind each year. And this year, beginning in January of 2025, is the last time we see that increase affecting us. So that's the first thing going on. And then the second is that also at the beginning of 2025, we've moved from having a fixed price that we pay to having our cost based on price times quantity. And I think that's a positive move for us because it creates the opportunity for us to really manage our costs by managing the amount of licenses that we need for our customers. And that's an opportunity we've been preparing for and we'll continue to look to utilize to make sure we optimize and manage the costs here. Got it. Thank you both. Thanks, Jamie. Martin, you want to close out our call? Sure. Thanks, everybody, for joining us today. As we look ahead and we continue to build on our solid and proven foundation of the 3 As, Kyndryl Consult and Kyndryl Bridge, we'll continue to leverage our capabilities to expand our share of wallet with our existing customers and, as we've said a number of times, continue to win new customers as well. We'll continue to operate at an aggressive pace, both in terms of tackling our immediate execution priorities and the longer-term milestones that we set out back in November on Investor Day. And obviously, we'll continue to rely on the Kyndryl Way as our playbook for how we work and how we win together as a team. We are showing up with our customers with a winning mindset. We're challenging ourselves to drive progress every day. And we're focused, obviously, on the outcomes we're delivering. So we see opportunities available for us to continue to learn, to innovate, to grow, to assert our market leadership, to demonstrate our expertise, and to deliver the exceptional value that our customers expect and have gotten. So we look forward to capitalizing on all those opportunities. So with that, Operator, we will conclude our call. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.